Economists and housing industry experts anticipate that the new tax code could raise overall home ownership costs in California and decrease the inventory of homes for sale.
“We think it’s going to undermine values,” said Jordan Levine, senior economist with the California Association of Realtors. “It just makes all of our existing problems that much more serious.” San Jose homeowners will no longer be able to take an estimated $5,400 in deductions this year, the highest of any metro area in the country, according to Apartment List. The Mercury News reports that the typical East Bay homeowner will lose $4,500 worth of deductions, translating to about $110,000 over the term of a 30-year mortgage.
The new tax law is expected to cut itemized deductions for Bay Area homeowners deeply. For example, the typical homeowner in the 18th Congressional district, encompassing a stretch from Redwood City to San Jose and including some of the wealthiest communities in the country, deducted about $60,000 in state and local taxes in 2015, according to a study by the National Association of Realtors. Those deductions are now capped at $10,000 under the new law.
